Cement makers squeeze supply, India

Published:
13 June 2007

The cement sector, in which prices are currently reigning at an all-time high, is now battling a severe shortage in product supply. Even as the demand for cement is on the rise, dealers in the country’s largest cement market, Mumbai, say major manufacturers like ACC, Ultratech and Gujarat Ambuja have squeezed supplies by as much as 40-50%.

In other parts of the country, supplies have been choked by 10-15%. Coming just days ahead of the onset of the monsoon, normally a slack season for cement, industry observers see the move as a clever ploy by manufacturers to pre-empt falling prices. Cement offtake is expected to dip 30-35% during the monsoon season. "The move is to maintain the high prices. Cement prices are not expected to increase further, but the huge demand for the commodity, coupled with a shortage in supply, will not allow prices to ease," said a dealer on condition of anonymity. Supply has also been choked by a reduction in cement shipments.

The government has been giving priority to the transport of coal and foodgrains on railway rakes instead of cement. Dealers are also facing pressure from construction players, who are going full throttle to complete as much construction as they can before the onset of the monsoon. Water-Proofing Cement supply choked by 40-50% in Mumbai, 10-15% in other parts Monsoon season to see cement offtake dip by 30-35% According to one dealer, "Cement prices have not eased during the past two years. With the huge demand and short supply, prices are not likely to reduce in the current monsoon, either. However, in July and August, prices are expected to fall by not more than Rs 5 a bag."